How is the social security fund invested?
The Social Security trust funds are invested entirely in U.S. Treasury securities. Like the Treasury bills, notes, and bonds purchased by private investors around the world, the Treasury securities that the trust funds hold are backed by the full faith and credit of the U.S. government.
The Trust Fund represents a legal obligation of the federal government to program beneficiaries. The government has borrowed nearly $2.8 trillion as of 2014 from the Trust Fund and used the money for other purposes.
- In June 2011, the average Social Security benefit was $1,180.80 per month. The maximum possible benefit for a worker retiring at age 66 in 2011 is $2,366. But to get this amount, the worker would need to earn the maximum taxable amount, currently $106,800, each year after age 21. Familiarize yourself with the formula.
- Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most. We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount.” You choose to get benefits before your full retirement age.
- For people with lower than average earnings, the ratio of the lifetime benefits they receive from Social Security to the lifetime payroll taxes they pay for the program is higher than it is for people with higher average earnings. In that sense, the Social Security system is progressive.
Lyndon Johnson was the first president to borrow from the Social Security Trust Fund. He needed to pay for the Vietnam War. Next was Ronald Reagan and the military buildup of the 1980s. GW Bush did in the 2000's.
- Which political party started taxing Social Security annuities? A3. The taxation of Social Security began in 1984 following passage of a set of Amendments in 1983, which were signed into law by President Reagan in April 1983. These amendments passed the Congress in 1983 on an overwhelmingly bi-partisan vote.
- The United States Social Security Administration (SSA) is an independent agency of the U.S. federal government that administers Social Security, a social insurance program consisting of retirement, disability, and survivors' benefits.
- To date, 450+ million SSNs have been issued, but with just under 1 billion possible number combinations, there has never been a need to recycle numbers, and the SSA notes that it does "not reassign a Social Security number (SSN) after the number holder's death."
Social Security is funded with income from four sources. Social Security is primarily funded by payroll taxes assessed on wages in the United States. The employer pays 6.2% of income, and the employee chips in another 6.2%. The self-employed, being both employer and employee, pay 12.4% of income into the program.
- Workers and employers pay for Social Security. Workers pay 6.2 percent of their earnings up to a cap, which is $127,200 a year in 2017. (The cap on taxable earnings usually rises each year with average wages.) Employers pay a matching amount for a combined contribution of 12.4 percent of earnings.
- Lyndon Johnson was the first president to borrow from the Social Security Trust Fund. He needed to pay for the Vietnam War. Next was Ronald Reagan and the military buildup of the 1980s. GW Bush did in the 2000's.
- The Federal Insurance Contributions Act (FICA) is the federal law that requires you to withhold three separate taxes from the wages you pay your employees. FICA is comprised of the following taxes: 6.2 percent Social Security tax; 1.45 percent Medicare tax (the “regular” Medicare tax); and.
Updated: 2nd October 2019